MercoPress. South Atlantic News Agency

OPEC and Bush agree: speculation dominates oil prices

For once OPEC and US president George Bush seem to agree there's no short term fix to oil international prices. The convergence occurred Monday as crude prices edged closer to 120 dollars a barrel, fueled by the shutdown of a key pipeline and concerns about violence in Nigeria.

Oil prices were also helped after Britain closed a North Sea oil pipeline, which carries about 40% of the country's oil, due to a worker strike. Meanwhile, the president of the Organization of Petroleum Exporting Countries said oil prices could go as high as 200 US dollars a barrel. OPEC chief Chakib Khelil was quoted in Algeria's government newspaper, El Moudjahid, saying the high prices are a result of the dollar's slide, and have little to do with oil supplies. On Monday in the White House spokesperson Dana Perino said there was no short-term fix to record-high gasoline prices and the United States should try to increase domestic production and seek alternative fuel sources. Ms Perino said gasoline prices were "entirely too high, but I think it would be disingenuous and unfortunate for American consumers for them to be led to believe that there is a short-term fix. There is not going to be one". The United States must try to increase domestic production and exploration in environmentally friendly ways, she said. While she was talking truckers drove their big rigs through downtown Washington and held a rally at the Capitol to protest high diesel fuel prices. The average price for diesel fuel reached a record 4.18 US dollars a gallon after rising 3.4 cents over the past week, the EIA said. Chakib Khelil told El Moudjahid: "I don't think that an increase in production would help lower prices, because there is a balance between supply and demand and the stocks of gasoline in the United States have recorded a surplus and are at their highest level for five years." He added: "The prices are high due to the recession in the United States and the economic crisis, which has touched several countries, a situation that has an effect on the value of the dollar. Each time the dollar falls 1 per cent, the price of the barrel rises by 4 US dollars and of course vice versa". OPEC's chief comments could also be related to the coming meeting of the Federal Reserve later this week when according to Wall Street lobbyists interest rates could again be lowered between 25 and 50 points. This added to the liquidity offered by the Fed to the banking system keeps fueling speculation in commodities. In Nigeria, attacks on oil facilities are just part of the problem. The Nigerian government is trying to mediate a worker's strike at the Exxon Mobil affiliate. The facility normally produces 800,000 barrels a day, but workers walked off the job, demanding better pay and working conditions. Also today, the anti-corruption group Transparency International issued a report criticizing oil and gas companies for failing to fight corruption. The report rated 42 companies, saying most do not disclose enough information on their dealings with resource-rich countries, hampering efforts to eliminate poverty. In Nigeria, attacks on oil facilities are just part of the problem. The Nigerian government is trying to mediate a worker's strike at the Exxon Mobil affiliate. The facility normally produces 800,000 barrels a day, but workers walked off the job, demanding better pay and working conditions. Some US senators have pinned the blame for high oil prices directly on OPEC and Saudi Arabia, its largest and most powerful member. In a letter to President George W. Bush last week, they said Riyadh had cut its oil production by about 2 million barrels a day over the past three years, even though oil prices had continued to rise.